Do It Yourself?
Estimated Lesson Time: 7 minutes
I once read a very amusing e-mail proving that it would be a waste of Bill Gates’ time to bend down to pick up a $3000 bill if one existed. This is because his time, according to the math shown in the e-mail, is worth more than $3000 per second. In theory, this means it costs Bill Gates $90,000.00 just to pee and another $30,000.00 if he washes his hands. Of course, there are many false assumptions here but it does prove a good point: our time has monetary value, and there is a cost associated with everything we do. Besides, it sure does make an amusing story. :)
A common characteristic shared by most successful people is the value of time. Many wealthy people assign a value to their time and make decisions based on the monetary value of their time, or the opportunity cost. Successful people take it a step further; they understand the difference between immediate cost and long-term cost, and also factor enjoyment into the equation. Life is full of mundane tasks, and we all have the choice of doing them ourselves or seeking help. The successful individual knows how to make this choice.
What is the monetary value of your time? Here are three of the categories in which most working individuals fit.
- Fixed salary. Those who are paid a fixed salary based on an average number of hours per day, and who do not get any more money from working extra hours, can use a simple formula: take total yearly income and divide it by the total number of working hours per year. Be sure to add in bonuses and other perks that can be translated into monetary form. For example, use of a company car may be equal to another $5,000 per year or stock options may be worth about $2000 per year. A $50,000.00 per year total income with about 2400 hours of work per year would equate to about $21 per hour.
- Variable salary. This is where most salespeople, independent doctors, lawyers, and other performance paid workers fall. This is a group that can make more money for working more hours. Using the same formula above, the monetary value of one hour can be calculated.
- Business owners. In this sense, business owners can be defined not only as sole owners of a business, but stockholders of a business in which their efforts can directly influence the value of the company. In my first two years of running Archieboy, I did not make a dime personally. This certainly does not mean my time was not worth anything. Business owners invest their time in their businesses, which has value. The value of a business is really only realized at the time in which all or part of it is sold. Therefore, for a business owner to calculate his or her monetary value of time, many assumptions have to be made, specifically, the current and future value of the business they are building.
Now that we have our approximate hourly worth, it is not difficult to put a value to life’s many tasks and chores. For example, a painter can give you an estimate of painting a room, and tell you how many hours it will take him. A house cleaner can tell you that she charges $20 per hour for cleaning services. A plumber, an accountant, and a lawyer can all give you their hourly rates as well.
Unfortunately, this is where most people stop and make their decision between doing something themselves or paying others to do it for them. The successful individual figures in these very important factors:
- Long-term costs vs. immediate costs. If you want a room painted, and the professional painter’s estimate is $500, and your costs are $90 for the supplies, and about 6 hours of your time at $50/per hour, the immediate costs involved would lead to believe that you are better off doing the job yourself. However, what are the long-term costs? As an amateur, you may buy the wrong paint. You may not clean the wall properly or paint at a temperature that will cause the paint to come off or begin to chip years before it should. As an amateur, you can do a number of things wrong that can cause to you spend more time by having to do things twice, waste money on supplies, or do a poor job that will not last as long as a professional job.
- Risk of getting hurt or hurting others. What if you fell off the ladder while painting and broke your finger, your hand, your leg, or your neck? How would this affect your ability to make money in your current job? If installing a gas heater, what if you did not make a connection tight enough and your home exploded?
- Lost time. When a professional quotes you for his or her time, the figure they give you most often includes the time it takes for them to prepare for the job and clean up after the job. In our room-painting example, how much time does it take to get the supplies, prepare the room, and clean up after the job is done?
- Cost of learning. How much time is needed to research or learn about what needs to be done? Do you have manuals or instructions to read prior to doing the job? Do you have to spend time consulting experts or professionals? Is this information that you will most likely never use again?
- Guarantees. Most professional help, especially those who are licensed, have some kind of guarantee on their work. This means if something goes wrong, they will make it right for no charge. If you do something wrong, it is more money out of your pocket.
- Pros can do it better. You may be confident in your abilities and in some cases you may be able to do a better job or higher quality work than others you would have to pay. But, for the most part, pros specialize in what they do and can do a better job than the average person.
- Enjoyment. In my line of work, much of my work is thinking. I do enjoy many mindless activities such as cardiovascular exercise, doing dishes, folding laundry, and others where I can be immersed in my own thoughts. I also enjoy more stimulating activities in which I learn and expand my knowledge, such as programming and web design. Enjoyment alone can be reason enough for doing something yourself.
Consider the real costs involved in “doing it yourself” versus paying someone else, especially a professional, to do it for you. Professionals are often far more efficient at doing what they do and can free you from the often mundane and sometimes difficult chores in life. When it makes sense, spend your money on peace of mind by having a professional do the job they are best suited to do and spend your valuable time on your goals and life purpose.
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Some discussion questions (some may not apply to this lesson):
- Have you implemented this idea in your life? How has it been working for you?
- Do you have any interesting stories related to this lesson? Do tell!
- What do you admire most about this person? (success biography days)